2008 End-to-End Large-Market Outsourcing Providers

END-TO-END LARGE-MARKET HR OUTSOURCING PROVIDERS

The success of the single-vendor approach hinges on matching supplier capacity with client needs. Only three HRO deals valued at $1 billion or more have been signed in recent years, and Convergys holds two of them: the $1.1 billion, 13-year DuPont contract signed in November 2005; and the $1 billion, 10-year Johnson & Johnson deal announced in May 2007. The third mega-deal is Accenture’s 2006 contract with Unilever.

Convergys has signed other major deals in the past year, including a contract for HR administration and payroll services for Starbucks in the U.S. and Canada as well as benefits administration in Canada. Customer management remains the mainstay of the company, however, which reported total revenue of $2.8 billion in 2007. Convergys’ guidance to investors and Wall Street calls for HR management revenue of $250 million in 2008, up slightly from 2007, and an operating loss of less than $15 million for the HR line. (Read more here.)